U.S. Senator Chris Coons (D-Del.) praised a report by the New America Foundation showing that children can be more successful at saving for college when it starts early and they are given the infrastructure to save. College savings accounts are an integral component of the American Dream Accounts Act, which Senator Coons introduced in March to help at-risk students plan for college.
"Now more than ever, amid intensifying global competition and rapidly changing technology, it's critical that young people not only finish high school, but pursue some kind of higher education or training," Senator Coons said. "That is why I introduced the American Dream Accounts Act to help students and their families successfully plan for college. This study by the New America Foundation clearly demonstrates the need to start students off early on the track to financial planning and savings."
The report finds that children are significantly more likely to maintain a relationship with financial institutions and have greater financial assets later in life when they have a savings account earlier in life. However, some children gain access to savings accounts while others do not--an inequity that tends to be based on parents' socio-economic status. By giving low-income families the tools they need to open savings accounts for their children, at-risk students will be more financially sound, with more resources to pay for secondary education.
The release of the New America Foundation report coincided with the U.S. Department of Education announcement on Thursday that the College Savings Account Research Demonstration Project will make an $8.7 million commitment of federal GEAR UP funds to support college savings accounts for students participating in the GEAR UP program, which is designed to increase the college readiness of low-income middle school and high school students. The project will provide about 10,000 high school students with savings accounts as well as counseling to develop smart financial habits.
"We believe that savings accounts play a key role in helping all students -- especially those from low-income families -- access and succeed in college," U.S. Secretary of Education Arne Duncan said in a release. "Empowering disadvantaged students with financial resources and skills will enable them to make smart investments in higher education -- and we'll gain valuable knowledge about how to best serve these students in the future."
Senator Coons' American Dream Accounts Act of 2012 would authorize the Department of Education to award three-year competitive grants to innovative and comprehensive partnerships that support low-income students in preparation for higher education. The legislation encourages partnerships among schools, colleges, non-profits and businesses to develop secure, Web-based student accounts that contain information about academic preparedness, financial literacy and high-impact mentoring and would be tied to a college savings account. Instead of approaching these threads independently, this bill connects students, parents and teachers across silos, and takes a step toward helping more at-risk students of all income levels access, afford and complete a college education.